NorAm Drilling (NORAM) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue was $24.9 million, with clean day rate at $25,600 and fleet utilization at 85.9%, both slightly down from Q1 2024 due to M&A activity and contract transitions.

• Adjusted EBITDA was $4.8 million, down sequentially, impacted by increased repair and maintenance expenses.

• Net income after tax was a loss of $0.3 million, or -$0.01 per share.

• Paid $5.2 million in dividends during the quarter, with 21 consecutive monthly distributions and a 13% annualized yield.

• Ten of eleven rigs are contracted in the Permian Basin, with one idle rig being marketed.

Financial highlights

• Q2 2024 revenue was $24.9 million, nearly flat sequentially, supported by higher reimbursables.

• Adjusted EBITDA was $4.8 million, excluding $0.1 million in non-cash stock option costs.

• Net loss was $0.3 million, with operating profit at -$153,000, down from Q1 2024.

• Cash balance at quarter end was $10.6 million, with $5.6 million in operating cash flow.

• Capital expenditures were $0.3 million in Q2 2024.

Outlook and guidance

• Stable near-term outlook with 10 of 11 rigs contracted; opportunities exist to deploy the idle rig by early 2025.

• Permian rig counts are expected to have reached or be near a bottom, with modest increases possible in late 2024 and 2025.

• Stability in natural gas prices above $3 per MMBtu could drive increased rig demand.

• Day rates have stabilized, with potential for increases in the next three to six months.

• Shale oil production growth is expected to slow due to lower well completions and active rig counts.